Brookfield Infrastructure Partners (BIP +1.82%)(BIPC +1.36%) invests in exactly what its name implies, infrastructure. It is as close to a one-stop shop as you get for infrastructure investing, and it comes along with an attractive yield. If you think in decades and are looking to generate as much income as possible from your portfolio, here are three reasons to consider buying Brookfield Infrastructure like there's no tomorrow.
1. Brookfield Infrastructure is not going it alone
One of the first things you need to understand about Brookfield Infrastructure is that it is a fairly complex business. That's not because of what it owns, per se; it is because of the corporate structure. Brookfield Infrastructure is a way for Brookfield Asset Management (BAM 1.79%) to raise permanent capital. Brookfield Asset Management is one of Canada's largest asset management companies, with a long history of investing in infrastructure on a global scale.
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If you buy Brookfield Infrastructure, you are, essentially, investing alongside Brookfield Asset Management and its clients. Brookfield Infrastructure represents permanent capital because once a share or unit (more on this in a second) is issued, it remains in existence until it is bought back and canceled. The benefit of this to Brookfield Infrastructure investors is that they have a well-financed partner with a huge amount of institutional knowledge. And Brookfield Asset Management has big growth plans, as it expects to double the size of its asset management business by 2030. Simply put, Brookfield Infrastructure punches above its weight, noting that it has a modest $15 billion market cap.
A key part of the complexity is that there are actually two Brookfield Infrastructures. Because some institutional investors can't own limited partnerships, Brookfield Asset Management created a corporate share class to broaden the pool of cash it could access. So you can buy Brookfield Infrastructure Partners or Brookfield Infrastructure Corporation. There's an important difference.
2. The income is generous with Brookfield Infrastructure, either way
Brookfield Infrastructure Corporation's dividend yield is 4.2%. Brookfield Infrastructure Partners' distribution yield is around 5.2%. The two entities represent the exact same business and have the exact same distribution. The yield on the corporate share class is lower because there's more demand for that class. Most small investors will be just fine buying the partnership units, which are managed in a way that you can own them within tax-advantaged retirement accounts.
NYSE: BIPC
Key Data Points
Both of the yields on offer from Brookfield Infrastructure are attractive. For reference, the S&P 500 (^GSPC +0.19%) has a yield of roughly 1.2%. Brookfield Infrastructure Partners, the older of the two entities, increased its distribution at an annualized pace of 9% between 2009 and 2025, assuming the distribution is maintained at its current level. That is the high end of the 5% to 9% target distribution growth range the business has set for itself.
It should be pretty easy to like a lofty yield backed by a lofty distribution growth rate.
3. Brookfield Infrastructure has a solid business model
The next piece of the puzzle here is that Brookfield Infrastructure owns an attractive portfolio of cash-generating infrastructure assets. It has exposure to the utility (transmission and distribution), transportation (railways, toll roads, and terminals), energy (pipelines), and technology (cell towers and data centers) sectors. Moreover, the portfolio is globally diversified, with assets owned in North America, South America, Europe, and Asia.
NYSE: BIP
Key Data Points
If you are looking for exposure to fee-generating infrastructure assets, Brookfield Infrastructure is all you need. If you are looking for a high yield backed by a well-structured business, Brookfield Infrastructure has that covered, too. Basically, either way you look at this business, it looks like an attractive income investment opportunity.
Reliable income is highly valuable
All in, Brookfield Infrastructure can be a foundational investment for your dividend portfolio. What makes it a buy for most investors right now is that Brookfield Infrastructure Partners' units are trading roughly 25% below their 2022 peak. Debt costs are the main reason for the dip; however, falling interest rates could potentially spark renewed interest on Wall Street (after rising rates depressed interest). While this is a well-run business that isn't going away anytime soon, the price could move away from you if you wait too long to jump aboard.
